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Civil Action

Imagine working in an organization that makes it so hard to fire nonperformers that managers have quit trying. Imagine hiring from a list of the three top scorers on a written test that has little to do with future performance on the job.

Imagine routinely losing your best employees because you can’t pay them what they’re worth. And imagine enduring layoffs in which those with seniority “bump” other employees — so when 100 people lose their jobs, 400 more play musical chairs, winding up in jobs they aren’t trained for and don’t want.

If you can imagine all that, you have a glimpse of what life is like inside a typical government organization. These are but a few of the absurd inefficiencies built into the civil service systems still used by most American governments.

Civil service was invented for the right reason: to stop political manipulation of public employees. A century ago, victorious elected officials routinely fired employees of the opposing party and brought in their own patronage workers. Two years after a frustrated patronage-seeker assassinated President Garfield in 1881, Congress created our first civil service system, a set of personnel rules governing the hiring, firing and management of federal employees. By 1993, the basic rule book — the Federal Personnel Manual — had grown to 10,000 pages.

For years reformers have taken aim at this bureaucratic beast and failed. But in the 1990s the political equation has begun to change. The state of Georgia recently eliminated its civil service system for everyone hired after July 1. Florida, California, Minnesota, Iowa, Virginia, Maryland and many cities and counties have launched more gradual reforms.

Overseas, the British have whittled a thick stack of personnel regulations into one slim volume, delegating most authority for pay structures, bargaining and job classification to departments and agencies. New Zealand has swept away virtually its entire civil service system, freeing each department to create its own personnel rules.

Many members of Congress understand the problem. Last year they grew so desperate to improve the Federal Aviation Administration — the agency we trust with our lives every time we board an airplane — that they exempted it from civil service, demanding that it create a modern personnel system from scratch.

Congress almost passed a civil service reform bill last summer, but Republican leaders decided not to hand the president another victory before the election. The administration has not resubmitted the bill; it is now asking only for permission to reinvent personnel systems agency by agency, as Congress converts agencies to “performance-based organizations.”

This is too slow. Congress should pass a bill that embraces three big changes:

1. Let the Managers Manage. Most public managers don’t control their employees’ hiring, firing, promotions or pay. Is it any wonder they have trouble getting results?

Traditional civil service systems hand most power to central personnel offices. Hiring someone typically takes six months or more. When management professor E.S. Savas studied New York City’s system during the 1970s, he found that, on average, seven months elapsed between testing and hiring. During that time, the best applicants found jobs elsewhere — so the city hired from those who were left.

Virtually all civil service systems dictate how much managers can pay their people. Even California, which has allowed agencies to control their own hiring, still has 30 rules that dictate exactly how much employees can be paid when they are hired, transferred, promoted or reinstated.

In contrast, New Zealand and Britain have decentralized power over hiring, firing, promotion and pay to their departments and agencies. They have turned personnel offices into support functions, rather than control functions. Georgia has done the same.

2. Simplify the Job Classification System. Traditional personnel systems are divided into the well-known “GS,” or General Schedule, grades. Each grade has myriad pay “steps” through which employees move. Most states also have at least a thousand different job classifications; New York tops the list at 7,300.

Personnel departments waste thousands upon thousands of hours deciding whether specific jobs should be classified as GS-12 or GS-13, telling managers they can’t pay the salary they want to pay because the classification doesn’t allow it, and blocking their efforts to reclassify people.

Creative managers spend thousands of hours, in turn, outmaneuvering personnel departments so they can keep their best people. They rename jobs, invent new classifications, move people into consulting positions — whatever it takes.

The solution is radical simplification of the classification system. Federal demonstration projects authorized under the Civil Service Reform Act of 1978 experimented with “broad-banding,” which divides jobs into a small number of basic career paths (such as professional, technical, administrative and clerical), each with four or five broad pay bands. People are hired within one band, which defines their minimum and maximum pay. Within these boundaries, managers can set pay and reward performance.

Generally successful, broad-banding is spreading. Washington state has replaced 800 management classifications with four broad pay bands. The British revenue agency has replaced 120 traditional civil service grades with five pay bands that cover nearly 60,000 employees.

3. Tie Promotion and Pay to Performance. Traditionally, public employees make more money the longer they stay in their jobs — regardless of their performance. In a world rife with patronage abuses, this may have made sense. But in today’s rapidly changing world, with increased demands for performance, it creates the wrong incentives.

A few governments are simply abolishing longevity pay and substituting performance pay. The British, New Zealanders and increasing numbers of local governments in the United States now negotiate performance contracts with their top managers, whose salary increases or bonuses depend upon how well their organizations perform. For front-line employees, smart managers give performance bonuses to teams rather than individuals, since performance often depends upon the entire team.

The Price of Bureaucracy

Most public managers hate their civil service systems. Citizens should too, because they waste billions of dollars. Government payrolls in this country total well over $500 billion a year, without benefits. No one knows how much we could save with a modern personnel system, but 20 percent is a reasonable guess. That would be more than $100 billion every year — $400 for every man, woman and child in America.

We’re about to enter the 21st century led by governments that operate according to 19th-century personnel rules, and we can’t afford it. It’s time for reform.